Allen Highlights 4 Cases

State Board Report

July 2014

NASBA Legal Counsel Noel Allen alerted the Regional Meetings to four recent cases of significance to the Boards of Accountancy:

Greenberg v. Western CPE – The Defendant was a continuing professional education provider who reproduced in ethics course materials a summary of the State Board’s disciplinary action against Greenberg which he claimed was false and defamatory. Western CPE was granted summary judgment because the reproduced summary of disciplinary actions was initially published by the California Board and protected by the privilege for reports of official public proceedings. Mr. Allen commented that this case “shows the need for accuracy in a very mobile world” as there is an abundance of information in the public domain.

In re Garcia, 58 Cal 4th 440 (2014) – The court decided the fact that Sergio Garcia was an undocumented immigrant present in the United States without authorization did not, in and of itself, constitute unfitness to deny him admission to the California State Bar. Mr. Allen said this is a case to watch as Jose Manuel Godinez-Samperio brought a similar case in Florida and Cesar Vargas brought one in New York. The Florida legislature passed a law in May that authorizes practice by undocumented aliens. Whether this change will apply to all professions needs to be watched and it could impact mobility as well, he pointed out.

Lawson v. FMR LLC – Accountants employed by private companies that contract with publicly-traded companies are protected by the whistleblower provisions of the Sarbanes-Oxley Act. Although SOX usually does not apply to CPAs, Mr. Allen observed, “in this case the U.S. Supreme Court alluded to SOX and found Congress did not intend to leave these professionals vulnerable to discharge or other retaliatory action for complying with the law.” The justices noted that this case could have implications for accounting firms. Mr. Allen predicted a rise in complaints in this area will be coming to the State Accountancy Boards: “Individuals whistleblowing pursuant to federal statute may breach confidentiality.”

Barletta v. Rilling and City of Norwalk – The state statute which prohibited anyone convicted of any felony from being licensed as a precious metals dealer was ruled unconstitutional by the U.S. District Court for the District of Connecticut. In this case the blanket denial was the problem, Mr. Allen explained.